EU green light for Italy’s half-billion state aid scheme for industrial hydrogen

Brussels – The European Commission’s green light came today (Jan. 30) for Italy’s 550 million euro state aid scheme to support investments in the use of hydrogen in industrial processes, “to facilitate the transition to a zero-emission economy, in line with the Green Deal Industrial Plan.” As the EU executive itself points out in a note, the Italian scheme was approved under the Temporary Crisis and Transition Framework for state aid—adopted in March last year and extended until May 2024—to support measures in key sectors to accelerate the green transition and reduce fuel dependency.

The Italian measure aims to support investments that enable the replacement of methane and other fossil fuels with renewable hydrogen. State aid will be funded by the National Recovery and Resilience Plan (NRRP) and provides direct subsidies to companies that use fossil fuels as an energy source or feedstock. Eligible projects must result in reducing greenhouse gas emissions by at least 40 per cent or reducing energy consumption by at least 20 per cent. To be eligible, companies must switch to the use of renewable hydrogen, which can be “combined with electrification or significant energy efficiency improvements” in industrial processes.

The EU Commission concluded that the Italian scheme is “necessary, appropriate, and proportionate” to accelerate the green transition and facilitate the development of some economic activities, and is also “in line” with the conditions set out in the Temporary Crisis and Transition Framework. Specifically, “the aid will not exceed €200 million per beneficiary, will not exceed the aid intensities established in the Framework, and will be granted by December 31, 2025.”

Public support will be subject to conditions that ensure effective emission savings and the transition to hydrogen use. In all investments hydrogen use must account for at least 40 per cent of total energy inputs from the start of the operational phase of projects, at least 75 per cent of total energy inputs by 2032, and 100 per cent of total energy inputs by 2036. In addition, beneficiaries will not be allowed to increase their production capacity by more than 2 per cent.